Q. Who’s responsible for water leak damage? I am a condo owner in good standing and a former board member in my association. Several months ago my hardwood floors were damaged by a leaking radiator. In our bylaws, it explicitly states that the radiators are the property of the building; and that the building is liable for any damage to an owner’s unit caused by building-owned equipment such as the radiator. As the radiator could not be repaired, it was replaced by the building at the building’s expense. However, the board has informed me in writing that any damage to my apartment is my responsibility and that I should file a claim with my homeowner’s insurance policy. I have spoken to our managing agent about this, who understands our house rules and bylaws; however, she is unable to get a response from the board to the contrary. At this point, what should I do? Should I go ahead and make the repair and file for reimbursement from the board? Should I make a homeowner’s insurance claim? Should I commence legal action against the board in an attempt to force the building to pay for something that I know is the responsibility of the building? What recourse do I have and what should my next course of action be?
—Water-Logged in Will County
A. “Getting the board to follow the provisions of the association's declaration and bylaws ("governing documents") can often be an uphill battle,” says attorney Peter Jagel, founder of the Law Offices of Peter H. Jagel, P.C. in Naperville. “A Board of Directors has a great deal of discretion and power given to it from the association's governing documents and state statutes. However, just as owners are bound by the terms and provisions of these documents, so too is the Board of Directors. In fact, courts have ruled that Boards of Directors have a fiduciary duty to the owners to follow the association's governing documents.
“Your immediate course of action is somewhat dependent on the status of your floors. If they are damaged to the point where normal living is difficult and you have the wherewithal to replace them, I would do so. You should be careful to keep track of all of your expenses and have copies of all the estimates and final invoices involved. If they need to be replaced, but the damage is more cosmetic, then you can decide if the floors are OK to live with while you attempt to resolve this matter with your Board.
“The next step is to find out why the board has made this determination. Did the board get advice from its counsel that the association should not pay for this? From your letter, it sounds as though the property manager knows that the association should be paying for the repairs. Is the board ignoring this advice? A board that follows the advice of its respective professionals garners the protection of a defense called the Business Judgment Rule. If you are required to litigate this matter to force the board to follow the association's governing documents, this will be an important factor.
“If the board is still refusing to pay for the repairs to your floors, then you will have to get legal counsel involved to try to either convince the board to do so, or file a complaint to get a court to enter judgment in your favor for the cost of these repairs. If the board did not follow the association's governing documents and was not following advice from its counsel and property manager when it refused to pay for these repairs, then the court could also find that the board breached its fiduciary duty to you as an owner and impose an additional award of the damages you incurred in filing and litigating the lawsuit, including your attorney’s fees. Due to the cost of litigation, this can be an important factor in your decision to go forward and also can be important leverage in trying to convince the board to pay for the repairs without litigation, as the board may be faced with these additional expenses if it loses.
“There are more long-term and less direct ways of dealing with this type of problem as well. If a board is not looking out for its owners and not following the provisions of the association's governing documents, then there should be some interest amongst the owners in rectifying this situation. Try to get them removed as board members through the political process of voting them off the board. This can be done both at the annual meeting or a special meetings called for this purpose.”